Stephens v. Omni Ins. Co.
Decision Date | 23 April 2007 |
Docket Number | No. 57068-4-I.,No. 56625-3-I.,57068-4-I.,56625-3-I. |
Citation | 159 P.3d 10,138 Wn. App. 151 |
Court | Washington Court of Appeals |
Parties | Michael STEPHENS, on behalf of himself and all others similarly situated, Respondent, v. OMNI INSURANCE COMPANY, a foreign insurance company; and Credit Control Services, Inc. d/b/a Credit Collection Services, Petitioners. Rajvir Panag, on behalf of herself and all others similarly situated, Respondent/Cross-Appellant, v. Farmers Insurance Company of Washington, a domestic insurance company, and Credit Control Services, Inc., d/b/a Credit Collection Services, Appellants/Cross-Respondents. |
Clarence C. Jones, Gierke, Curwen, Metzler, & Erie, P.S., Tacoma, Melissa O'Loughlin White, John Arthur Granger, Cozen O'Connor, Seattle, E. Pennock Gheen III, Charles Albert Willmes, Jerret E. Sale, Bullivant Houser Bailey PC, Shawnmarie Stanton, Safeco Insurance Co., Stevan D. Phillips, Margarita V. Latsinova, Deidre L. Runnette, Stoel Rives, Seattle, for Appellants.
Matthew James Ide, Ide Law Offices, Murray T. Stakesby Lewis, Seattle, for Respondents.
¶ 1 At issue here is a credit collection agency's practice of sending aggressive notices on behalf of insurance companies in an attempt to recover subrogation interests from uninsured drivers. In each of these linked cases, notices styled as "formal collection notices" demanded immediate payment of an "amount due". We conclude the notices are deceptive and hold that the practice of sending them violates the Consumer Protection Act.
¶ 2 These two appeals have been linked for consideration because the core issue is the same. Credit Collection Services, Inc., was a defendant in each case below, and the focus of each appeal is the notices sent by Credit to the plaintiffs. Counsel for the plaintiffs is the same in each case.
¶ 3 In the first case, Michael Stephens (respondent on appeal) was the plaintiff below. Stephens rear-ended Carrine York's vehicle on June 9, 2003. The damage to her car was appraised at $544.09. York had underinsured motorist coverage with Omni Insurance Company. Omni subtracted the deductible of $100 and sent York a check for $444.09.1
¶ 4 Omni sent several letters to Stephens on August 5, 2003 asking him to get in touch with an Omni representative. One letter said, Another stated, 2 Stephens did not respond to these letters.
¶ 5 Omni sent two similar letters to Stephens on October 10, 2003. The first letter stated that York had been paid $444.09 for damage to her car and that Omni claimed a right to reimbursement from Stephens:
Our investigation into our insured's loss has determined that your auto was at fault for this accident, and under the terms of our policy we are making a claim against you for reimbursement of the amount we paid.
. . . If you do not have insurance for this accident, please contact the undersigned as soon as possible so that arrangements can be made to amicably settle this matter in a manner agreeable to all parties and to avoid any unnecessary legal action.
You have a right to dispute any or all of our claims. If you do not dispute it within 30 days of receiving this letter, Omni Automobile will assume that it is valid. You have a right to receive a copy of the repair estimate, a copy of the check that Omni Automobile paid to its insured, or to the repairer of the auto and copies of any or all other documents that verify the existence of our rights of subrogation.3
The second letter reiterated that Omni was looking to Stephens for full reimbursement: "Since our investigation reveals that you are uninsured for this loss, we seek full reimbursement directly from you for all payments we have made in this matter."4 Stephens — who was not sure about his insurance coverage — responded to these letters by sending Omni his own check for $444.09.
¶ 6 Six months passed. Omni made two more payments to York: $5,112 for medical expenses and $1,300 for bodily injury. Omni did not contact Stephens about these payments. Omni instead arranged to have its subrogation claim pursued by Credit Collection Services, Inc., a Delaware corporation licensed to collect debt in Washington.5 The notices sent by Credit constitute the practice alleged to be deceptive.
¶ 7 Credit began by sending a "formal collection notice" to Stephens on April 16, 2004. The notice specified $6,412.00 as the "amount due":6
SUBROGATION CLAIM REGARDING: AMOUNT DUE OMNI INSURANCE $6,412.00 THIS IS A FORMAL COLLECTION NOTICE You were involved in an incident which resulted in the above referenced damages being paid by our client. Please be advised that the amount reflected on this notice is an amount already incurred, and any further damages paid as a result of this incident will be added to this amount. Should this occur, you will be so advised Unless you can provide this office with evidence of insurance coverage that existed on the date of loss, our client will consider you financially responsible To avoid the possibility of legal action and/or license suspension (contingent upon applicable state law), you can make instant payment by check or credit card through our 24-hour toll-free touch tone service or by accessing our website @ www.ccspayment.com
¶ 8 Stephens called Credit twice upon receiving this notice. "I did not understand how I could owe such a debt or why it was in `collection'".7 Credit's telephone representatives told Stephens the notice represented amounts paid by Omni to York as a result of the accident. According to Stephens, one representative told him Credit had him in "collection" and "had the power to get money from me in a variety of different ways from whatever financial resources I had."8 Credit's notes reflect that Stephens "stated that he did not feel that he owed the balance stated in the letter."9
¶ 9 Credit sent Stephens a similar notice three weeks later. This second notice dated May 7, 2004 declared in large print: "ACTIVITY PENDING TEN (10) DAYS". The notice said: "You have failed to respond to our notice requesting full payment -or- evidence of insurance coverage that existed on the date-of-loss." The notice threatened consequences potentially including litigation and license suspension unless Stephens acted "immediately":
This office has been authorized to pursue full payment in accordance with both federal and state law(s) which could result in a law suit being filed against you and/or license suspension (contingent upon applicable state law). Be advised, state law requires that financial responsibility be maintained continuously throughout the registration period of your vehicle.
Act immediately, as your file is pending further action.10
¶ 10 Soon after Stephens received the second notice, he wrote to Credit stating that he disputed the charges. He requested proof of payment showing the alleged amount due. Stephens also contacted his insurance company, GEICO. GEICO contacted Credit on May 19, 2004 to let them know that Stephens was insured on the loss. Thereafter Credit sent no more letters to Stephens.
¶ 11 Meanwhile, concerned that his credit rating was in jeopardy, Stephens consulted an attorney.11 Stephens sued Omni and Credit in June 2004 for violating the Consumer Protection Act. He moved for summary judgment against both defendants. The court granted the motion as to liability and reserved ruling on the amount of damages. Appeal by Omni and Credit of the summary judgment ruling on liability is before this court on discretionary review.
¶ 12 In the second case, Rajvir Panag (respondent on appeal) was the plaintiff below. Panag was injured in a two car accident with Deven Hamilton on October 5, 2003. Panag was uninsured. Hamilton's insurer, Farmers Insurance Company, investigated and concluded that Panag was 40 percent at fault. Farmers paid Hamilton $6,102.53 for property damage. There was a $340 deductible. One month later Panag received from Credit Collection Services a "formal collection notice" on behalf of Farmers specifying the "amount due" as $6,442.53:12
SUBROGATION CLAIM REGARDING: AMOUNT DUE FARMERS INSURANCE $6,442.53 THIS IS A FORMAL COLLECTION NOTICE You were involved in an incident which resulted in the above referenced damages being paid by our client. Please be advised that the amount reflected on this notice is an amount already incurred, and any further damages paid as a result of this incident will be added to this amount. Should this occur, you will be so advised Unless you can provide this office with evidence of insurance coverage that existed on the date of loss, our client will consider you financially responsible To avoid the possibility of legal action and/or license suspension (contingent upon applicable state law), you can make instant payment by check or credit card through our 24-hour toll-free touch tone service or by accessing our website @ www.ccspayment.com.
A representative from Farmers later admitted that the purported "amount due" was a "mistake" as it should have been adjusted to reflect that Farmers' determination of Panag's liability was 40 percent.13
¶ 13 Three weeks later, Credit sent another notice of "Subrogation Claim Regarding: Farmers Insurance", this one enclosed in a black border containing in large font the words, "ATTENTION — ATTENTION — ATTENTION -ATTENTION — Enclose Bottom Portion with Your Payment". Again, the notice set forth $6,442.53 as the "AMOUNT DUE". It...
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